Several Canadian juniors that splashed onto the Canadian public markets in 2005 via an initial public offering quickly got busy with mergers and acquisitions in Canada and internationally during the first nine months of this year. "Contrasting this are the E&P companies which completed IPOs in 2004 that have focused more on exploration and development of their existing asset base rather than pursuing production acquisitions," reports Tom Pavic, vice president of Calgary-based Sayer Securities. The IPO whopper among juniors in 2004 was that of Opti Canada Inc., which went public with a C$301-million financing. In that same year, Deer Creek Energy Ltd. announced a C$161-million IPO. Both companies used the proceeds to focus on developing their oil-sands assets. "The success these companies have had since their respective IPOs is best illustrated by France-based Total SA announcing in August its plan to acquire Deer Creek for approximately C$1.7 billion," Pavic reports. Of the conventional juniors, Duvernay Oil Corp. had the largest IPO in 2004 (C$53 million) and since has focused on growth through the drillbit, Pavic reports. It has more than doubled daily production from 4,200 barrels of oil equivalent (BOE) per day to about 10,000. So far in 2005, Highpine Oil & Gas Ltd. had the largest IPO among Canadian juniors, raising about C$72 million. "The day after completing its IPO, Highpine announced that it was acquiring Vaquero Energy Ltd. in a C$430-million deal." The move nearly doubled Highpine's production to some 7,500 BOE per day and made the company a noteworthy player in the Pembina Nisku exploration trend in west-central Alberta, Pavic notes. Prairie Schooner Petroleum Ltd. closed its C$25-million IPO in March 2005 and has since announced four acquisitions totaling C$196 million, including the purchase of Purcell Energy Ltd. "Prairie Schooner's management team is very experienced in M&A transactions," Pavic adds. The team ran Ionic Energy Inc. and Great Northern Exploration Ltd., which were sold to royalty income trusts Shiningbank Energy Income Fund and APF Energy Trust for a total of C$504 million. The company's stock price has grown 62% since the IPO, and it has been able to use some stock to pay its acquisition bills. Other juniors to do IPOs recently and make acquisitions include Peerless Energy Inc., Mahalo Energy Ltd., Castle Rock Petroleum Ltd. and Richards Oil & Gas Ltd. "As long as oil and natural gas commodity prices are at record highs and there is a strong demand in the capital markets for equity in junior E&P companies, then the trend of going public through an IPO and growing through acquisitions will undoubtedly continue," Pavic says. "What could slow this activity down would be a dramatic drop in commodity prices, investors' demand for oil stocks falling, or a significant increase in acquisition prices, making it prohibitive for potential purchasers to pursue accretive transactions."